In The News

KMART Corporation Pays $1.4 Million to Resolve False Claims Allegations in Connection with Drug Manufacturer Coupons and Gas Discount

KMART Corp., better known as the Kmart department store chain that operates approximately 780 in- store pharmacies throughout the United States, Puerto Rico and the U.S. Virgin Islands, has paid the United States $1.4 million to resolve allegations that it violated the False Claims Act. This suit was filed by a qui tam whistleblower who is a former Kmart pharmacist and had allegedly witnessed Kmart’s illicit behavior.

This settlement resolves allegations that Kmart violated the False Claims Act by using drug manufacturer coupons and gasoline discounts as improper inducements to Medicare program beneficiaries. The United States government contended that between June 2011 and June 2014, Kmart deliberately and illicitly influenced the choices made by Medicare beneficiaries to use Kmart pharmacies to fill their prescriptions by authorizing the Medicare beneficiaries to use drug manufacturer coupons to reduce or abolish prescription co-pays that they otherwise would have been required to pay. It was alleged that Kmart’s conduct had caused Medicare beneficiaries to seek more expensive, brand name drugs in lieu of cost-effective generic drugs, which resulted in the government’s costs to increase without any added medical benefit.

Joshua Leighr, the False Claims Act whistleblower and former Kmart pharmacist who brought this case forward, will receive approximately $248,500 from the settlement—this is Mr. Leighr’s whistleblower reward for challenging Kmart and filing a lawsuit on behalf of the United States.

This settlement is a demonstration of the government’s emphasis on combating health care fraud and it illustrates the problem of Medicare fraud cases in the United States